Design of a watershed-based nitrogen trading system or the Big and Little Wood Rivers Watershed

Abstract

A watershed-based nitrogen trading system was designed for the Big and Little Wood Rivers Watershed in south-central Idaho as a policy tool to help manage increasing nitrogen loads within the Watershed. The study was performed on behalf of the Blaine County Commissioners in response to concerns regarding increasing population growth and nitrogen loading in the Watershed. A trading framework was developed based on case studies and existing trading frameworks. The developed framework included selection of a trading arrangement, development of a trading cap, design of a credit distribution system, establishment of a trading ratio, and qualification of transaction costs. Potential problems with trading, including administration of the trading program, pre-quantification of transaction costs, uncertainty in data collection and source monitoring, spatial and temporal distribution of pollutants, and enforcement of the trading program, are discussed. A water balance was completed in order to understand the hydrologic conditions of the Watershed. Water inflow for the Watershed included 2.24 kg3/yr of precipitation. Water outflows for the Watershed included 1.87 kg3/yr of evapotranspiration and 0.33 kg3/yr of surface water outflow. A point source/non-point source trading arrangement was set for the Watershed based on the currently high proportion of nonpoint nitrogen sources (e.g. agricultural lands and rangeland) and the future potential for increases in the proportion of nitrogen from point sources (e.g. wastewater treatment plants). A yearly nitrogen cap in the range of 569,300 kg/yr and 720,500 kg/yr was suggested for the Watershed. This range was based on estimates for actual nitrogen stream flow concentration and loading within the Watershed and acceptable nitrogen concentration values from EPA Ecosystem classification data, trophic states, and published data. Trading credits would be distributed to point sources in proportion to their current acceptable discharge levels and to non-point sources in proportion to the amount of land used for agriculture or ranging. The trading ratio set between point and non-point sources varied continuously between 1:1 and 1:2.6 depending on the distance of the non-point source from the river.